Metal Tech News – July 12, 2023
The International Energy Agency is cautiously optimistic about the progress made so far along the expanding supply chains for the minerals critical to electric vehicles and renewable energy.
Like the global energy markets it represents, the IEA is transitioning its analysis and policy advocacy toward the clean energy future, and now provides regular updates on the markets, policies, and technology trends for critical minerals.
As part of this transition, IEA has released its first annual Critical Minerals Market Review, an 83-page report that details how record deployment of clean energy technologies is powering enormous demand for minerals like lithium, cobalt, nickel, and copper.
According to the report released on July 11, more than 10 million EVs were sold in 2022, a 60% leap over 2021. Energy storage systems experienced even more rapid growth, with new installation capacity doubling last year. At the same time, photovoltaic installations continue to shatter previous records, and wind power is set to resume its upward march after two subdued years.
To keep pace with the clean energy transition, investments in critical mineral development rose 30% last year, which follows a 20% increase in 2021. Lithium experienced the largest increases in investments last year, a jump of 50%, followed by copper and nickel.
As a result, the market for energy transition minerals hit a high of US$320 billion – roughly the size of the global iron ore mining market – in 2022 and is set for continued rapid growth that moves the once niche energy metals market increasingly closer to center stage for the global mining sector.
If all the global critical energy mineral projects in the pipeline bear fruit, IEA estimates that there would be enough supply to achieve the climate targets set by national governments around the globe. This, however, is a big if and leaves zero margin for project delays or shortfalls of minerals required for specific technologies.
"At a pivotal moment for clean energy transitions worldwide, we are encouraged by the rapid growth in the market for critical minerals, which are crucial for the world to achieve its energy and climate goals," said International Energy Agency Executive Director Fatih Birol. "Even so, major challenges remain. Much more needs to be done to ensure supply chains for critical minerals are secure and sustainable."
While the number of new clean energy mineral projects is encouraging, IEA is concerned that too many of these are being added to the pipeline by countries that already dominate production.
"Compared with three years ago, the share of the top three critical mineral producers in 2022 either remained unchanged or increased further, especially for nickel and cobalt," the energy agency penned in its inaugural Critical Minerals Market Review. "Our analysis of project pipelines indicates a somewhat improved picture for mining, but not for refining operations where today's geographical concentration is greater."
China accounted for roughly 75% of global cobalt refining last year and is expected to increase capacity this year. The country also continues to hold a dominant 90% position when it comes to the production of magnet rare earths needed for EVs and wind turbines.
With resource-rich countries looking to add value to their energy transition minerals by adding value to them at home instead of shipping them to China and elsewhere for refining, while at the same time, the U.S. and other consumer countries are endeavoring to diversify supply chains, there are opportunities for diversification.
"However, the world has not yet successfully connected the dots to build diversified midstream supply chains," IEA wrote.
The International Energy Agency's worries over diversity of supply are underscored by China's plans to curb exports of gallium and germanium starting in August.
"These illustrate how relatively niche minerals such as magnesium, high-purity manganese, high-purity phosphorus and silicon may disrupt supply chains due to high reliance on a small group of suppliers," the energy agency wrote. "High-purity manganese requires a particular attention given the growing trends to adopt manganese-rich chemistries in batteries and the lack of projects to supply high-purity products, especially outside China."
To build upon the critical energy metals progress made over the past five years, IEA says a broad and bold strategy that brings together investment, innovation, recycling, rigorous sustainability standards, and well-designed safety nets is needed to sustainably achieve the global climate targets.
Toward this end, the agency is hosting the first ever IEA Critical Minerals and Clean Energy Summit in Paris on Sept. 28.
The summit will convene global government officials, executives from companies representing every link in the energy transition metals supply chain, heads of international organizations, investors, and stakeholders.
"As the world's energy authority, the IEA is taking the lead responsibility on secure and sustainable supplies of critical minerals. Managing these resources effectively is essential to ensure energy and climate goals translate into tangible action and clean energy projects on the ground," said Birol. "We see an urgent need to bring together governments, industry, investors and other stakeholders to collectively address questions that will have a profound impact on the future of energy security and global efforts to reach net zero emissions."
The agency has also launched the new IEA Critical Minerals Data Explorer, an interactive online tool that allows users to easily access and navigate the critical minerals data and projections. The initial version of this web-based tool provides users with access to the IEA's cutting-edge research and analysis on critical mineral demand projections under various climate policy scenarios and technology trends. The agency will add supply-side information in future updates.